TEL. Smart's NTC Fine Is Headline Risk, Not Earnings Risk

Highlights

• The NTC's ₱100,000 daily fine on Smart is small against PLDT's ₱241.8 billion market cap, though the regulator says it is already in effect.
• TEL trades just 0.8% above its 52-week low, after net foreign selling and a 4.05% slide over the past month.
• Vini Research Desk rates TEL a Buy, ~48% upside to our ₱1606.50 fair value.

The Setup

The NTC said it has prepared show cause orders against Smart, Globe and DITO imposing a ₱100,000 penalty per day "commencing today until the identified service deficiencies have been fully rectified." The regulator said its September speed tests showed no improvement in Metro Manila mobile internet versus first-half validations, and it flagged Smart in Parañaque, Manila and Pasig. PLDT said Smart, its wholly owned subsidiary, has not yet received the order and cannot comment on its terms, applicability or impact. TEL is trading near its 52-week low of ₱1,080.00 from Oct. 16, 2025, well below its Feb. 26, 2026 high of ₱1,425.00, and our momentum read on TEL is Bearish.

Source: PSE disclosure

Our Read

The peso cost stays marginal for a group of PLDT's size, and because the fine hits all three operators, it does not weaken Smart against Globe or DITO. The real variable is duration, which hinges on how fast PLDT adds capacity in the flagged cities. That would lift near-term spending but protect the subscriber base. With the stock pinned at its lows, the price already assumes a worse outcome than the order implies and gives no credit for Smart's paid AI service. We read this as headline risk, not earnings risk.

Vini Research Desk rates TEL a Buy, seeing about 48% upside to our fair value of ₱1606.50. A contained regulatory cost alongside a new paid-service revenue line supports future dividend growth and capital appreciation, which benefits holders of the Passive Income Plan.

What We're Watching

• When the fine starts counting, from the announcement or from receipt
• Smart's response and the NTC's re-validation of flagged cities
• Paid AI service pricing and uptake in the next quarterly results